Assessing the development and climate finance for renewable energy: An application of effectiveness framework for the case of Mongolia

Abstract: To accelerate sustainable development and mitigate climate change, an increasing amount of finance is being mobilized for the deployment of renewable energy (RE) in developing countries from bilateral and multilateral donors and climate funds. Even though this trend is present in Mongolia, there is still a lack of knowledge about how effective these efforts have been for renewable energy development in the country. Methodologically, despite the increasing use of aid effectiveness principles to assess development finance flows, there is lack of agreed indicators and criteria to assess such principles for the RE sector. The objective of the thesis is threefold. First, it aims to map development finance in energy in Mongolia from 2010 to 2018. Second, it aims to develop an analytical framework capable of integrating principles as established in the Paris Declaration on Aid Effectiveness, with the tailored indicators to RE. Third, it aims to deploy the analytical framework in a case study for Mongolia. The assessment is supported by the analysis of development finance data for energy and the review of ten RE interventions with the co-operation of total 14 donors. To further strengthen the results, interviews with practitioners from the Ministry of Energy, Green Climate Fund (GCF)’s accredited entity XacBank LLC, and Mongolia’s Renewables Industries Association were conducted. Findings show that most development partners’ practices are aligned with the national policy through results indicators and objective of the RE projects. The areas where integrations of effectiveness principles are most lacking include - mutual accountability, capacity building of local institutions, and inclusive energy NGOs. In conclusion, there is an urgent need for a tracking system that monitors development and climate finance at national and sectoral level in Mongolia. An important policy recommendation relates to enhancing co-operation for local institutions in the achievement of sustainable development goal 7-Affordable and clean energy (SDG7).